Monthly Archives: February 2015

In post-grad life one of the biggest issues I’ve encountered is how to properly allocate money and my spending. After about of year of implementing some of my own personal savings strategies, I’ve developed a plan that works for me. I’ve compiled some helpful tips below:

Tip 1: Reward Yourself

When most people embark on a mission to save money the mentality is to take things away. In all honesty, who likes giving up something they love? In my experience, absence makes the heart grow fonder. You’ll start to miss what you gave up, whether it’s your gym membership or your daily cup of coffee.

So keep drinking your daily cup of coffee, and keep your gym membership. They are part of your routine, messing with your routine will be a lot harder on you. It’s better to tackle those impulse buys first. Sometimes impulse buys blend so well into your daily routine you don’t think twice – great example: running shoes. You’ll rationalize buying a new pair of shoes because you have a gym membership.

One thing that’s worked for me is taking that impulse buy and “bookmarking” it. For me, I use Pinterest and pin items I want to a secret board. Then at the end of the month I’ll look at my Pinterest board and see what on the board I still want. Sometimes you’ll find those running shoes are a lot less appealing 30 days later. Other times you’ll find you still want them.

The goal is to limit yourself to one purchase per month off your Pinterest board. If you don’t use Pinterest simply keep a list. Some things you’ll actually end up buying, but generally speaking a few items won’t matter as much after a month or two. Over time you’ll transform the way you buy, by starting to buy the items you really need.

But here’s the most important part. Each month you buy something of the board. That way you’re rewarding yourself on a regular basis.

Tip 2: Save a set amount each month

The same way you pay your rent or mortgage each month, you should be putting money into your savings account. I like to think of this as “paying” your savings account. It’s okay to start small, the point is getting yourself into a habit of making the same payment each month. Once you are into the routine of putting the money away, you’ll hardly miss it. One thing my dad set up for me at a young age was an automatic transfer of a small amount, $75 each month, into my savings account. You should be able to set something similar up, this way it is automated and even if you forget your bank account does the work for you.

As you start to earn more money, consider increasing the amount you save each month. Especially when you receive a bonus or raise allocate as much as possible to your savings “payment” each month. Even if it hurts to put money away now, at the end of the day you are paying your future self. By saving a set amount each month you are avoiding living paycheck to paycheck.

Tip 3: Evaluate Your Income

Sometimes there’s opportunity right in front of you. It could be looking for opportunities in your current career or explore small side jobs that you might be able to take on in your free time. It doesn’t always work but it’s definitely worth exploring for the benefits of added income. One small word of caution is to make sure your side job doesn’t take away from your overall career goals. However, if your career isn’t quite your passion then you should strongly consider a side job that falls better in line with something you love doing. The best part about this is you won’t only potentially be making extra money, but hopefully you’ll be able to invest your time in something you love.

And the money you make with this side job should ideally go straight into your savings. If you rationalize this extra money as a reason to spend more, at the end of the day you’re just falling back on old habits. Make an effort to put that extra money into your savings!

Another, lesser known way to evaluate your income is to check up on any investments you’ve made. Perhaps you’ve set up an investment portfolio or your parents passed it onto you after college? Make sure you understand where your money is going. This might also be a good time to consider making a regular contribution to your investments, the same way you transfer money into your savings (if you follow tip 2).

Tip 4: Make Sure You’re Living Within Your Means

If you’re read this far you’ve made it to one of the hardest tips to follow – living within your means. By living in this case, I literally mean where you live. One of the largest expenses you’ll pay will be rent. That being said, as a general rule of thumb it’s ideal to keep your living expenses at 30% or less of your total monthly income. Sure, this might mean you can’t have the place of your dreams. But look at it this way, in the long-term you’ll be saving more of the money (if you follow tip 2) so one day you can afford a house, car, or other large purchase that you want.